Parliament meets with business owners to discuss plan for economic revival

Al-Kharafi: The government needs to allocate a portion of every tender for SMEs to encourage economic growth

Al-Kharafi: Banks, telecoms will not lay off employees

By B Izzak

KUWAIT: Bader Al-Kharafi, Vice chairman and Group Chief Executive Officer of Zain Group, said the telecoms and banking sectors have committed to not lay off their employees or reduce their salaries for at least one year due to the impact of the coronavirus pandemic.

Speaking at a symposium organized by the National Assembly on Wednesday to review steps to provide assistance to small and medium enterprises (SMEs), which are struggling because of the coronavirus crisis, Kharafi, who is also a board member of Gulf Bank, called for legislation stipulating government guarantees for bank loans to the sector in these difficult times.

Kharafi said Kuwaiti employees in the private sector are in good shape and are not in danger of losing their jobs.

"The telecoms and banking sectors, where a large number of Kuwaitis are employed, have committed not to touch their salaries  and their positions for at least one year, and this also applies to expatriates,” he said.

But he said the problem today is in the SME sector, which requires solid help from authorities, adding that these projects are facing difficulties in securing credit from banks because there are no guarantees. Banks have no appetite to provide loans to SMEs and the Central Bank must issue a law to guarantee 80 percent of these loans, said Kharafi, adding that this will encourage banks to provide the necessary finance.

Kharafi also called for giving a certain percentage of government projects to SMEs, because supporting them has become a national duty and is "inevitable”. He said that problems today require actions and attractive statements won’t help. Kharafi said the Kuwaiti package of incentives is still more of promises on paper without actions.  

National Assembly Speaker Marzouq Al-Ghanem called on the government and the Assembly to listen to the complaints of SMEs and then take actions to support them. Ghanem stressed that the Assembly will not issue legislation that could undermine the interests of SMEs, adding that priority is now given to health issues, but after that the economy will be accorded top priority.

The Assembly’s health and labor committee is meanwhile scheduled to finalize amendments to a new labor law in the private sector today that would legalize salary cuts to mitigate the impact of the coronavirus. Rapporteur of the committee MP Saadoun Hammad expected the bill to be ready for voting in the Assembly next week.

Minister of Social Affairs Mariam Al-Aqeel told the symposium at the Assembly that the draft law allows businesses to cut salaries by up to 50 percent based on mutual agreement with employees. She said the Council of Ministers decided to double the labor support payment for some 72,000 Kuwaitis employed in the private sector as a guarantee against cutting their salary or laying them off.

The amendments will mostly apply to expatriates employed in the private sector, whose number has reached 1.66 million. But government and private companies have already started laying off expat employees. Kuwait Airways has fired some 1,500 expat employees, or 25 percent of all foreign staff. The Municipality said it plans to fire half of its 900 expat employees.

A number of private firms, some of them major companies outside the telecoms and banking sectors, have already laid off thousands of expat employees and cut the salaries of many others after their businesses came to a standstill because of the shutdowns.

Oil Minister Khaled Al-Fadhel told the Assembly symposium that he has issued a decision banning the appointment of expatriates in the oil sector in the current fiscal year 2020/2021 and that he will try to reduce the number of expats in Kuwait Petroleum Corp and its subsidiary companies. The number of expatriates in the oil sector is already very small after oil companies had resorted to contractors to supply manpower almost three decades ago.